President Signs Internet Tax Ban

On February 24, 2016, President Obama signed into law a trade and customs bill (H.R. 644) that includes a provision permanently banning state and local taxes on Internet access.

The provision, known as the Internet Tax Freedom Act, has long been a priority for the NAR because the Internet has become such a vital tool for REALTORS® and for buyers and sellers of real estate. Keeping the Internet free of state and local access taxes makes it much easier to utilize this important technology.

A temporary ban on Internet access taxes was first enacted in 1998, and has been extended for various periods five times over the years since then. H.R. 644 now makes the ban permanent and also ends, on June 30, 2020, the grandfather provision that has protected levies in the seven states – Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin – that had passed early access taxes on Internet service.

The bill does not address the more controversial but unrelated issue of allowing states to require remote Internet and catalog sellers to collect sales tax from all out-of-state purchasers of goods. That bill, the Marketplace Fairness Act, passed the Senate in 2013 but has since stalled in the House of Representatives.